North Korea is in the midst of a major crackdown on loan sharks following the passage of a “Loan Law” in early February, Daily NK has learned.
According to multiple Daily NK sources in North Korea on Friday, about 60 people in South Hamgyong Province and Chagang Province have received criminal punishments for private lending activities since March. The crackdown came after the 24th plenary meeting of the 14th Standing Committee of the Supreme People’s Assembly enacted the Loan Law in February.
Speaking on condition of anonymity for security reasons, a source in South Hamgyong Province said the provincial branch of the Ministry of Social Security “reported the arrest, trial and sentencing of about 40 people to forced labor and reeducation-through-labor for violating the lending law to the provincial party committee as its greatest success to mark Party Foundation Day.”
“The provincial branch of the Ministry of Social Security hosted an award ceremony on Oct. 9 to mark Party Foundation Day,” a source in Chagang Province told Daily NK, also speaking on condition of anonymity. “At the ceremony, the ministry — handing out awards and commendations — congratulated police officers for rounding up about 20 local violators of the Loan Law over two sweeps, confiscating their funds for the state coffers and sending the offenders to reeducation-through-labor.”
This means about 40 people have been arrested, tried and sentenced to forced labor for Loan Law violations in South Hamgyong Province, along with about 20 people in Chagang Province.
The arrests suggest that after the North Korean authorities enacted the Loan Law to soak up idle money by encouraging people to use banks, the state has intensified criminal punishments on private lending.
“During COVID-19, many people barely got by on high-interest loans from donju or by hocking their possessions to pawn shops,” said the source from South Hamgyong Province, using a term referring to the wealthy entrepreneurs in North Korea. “When people were starving to death due to prices in the markets climbing daily after the sudden closure of the borders [back in January 2020], private lenders were the only people they could borrow money from.
“People said that if the state enacted policies to breed trust in the banks, loansharks and pawn shops would naturally disappear; however, far from doing that, the authorities were just handing out awards to themselves for eliminating the last place people could borrow money in a pinch.”
Many North Koreans have serious doubts about the integrity of their government’s financial institutions. During the country’s November 2009 currency reform, many people found that the hard-earned assets they had amassed during the Auduous March period of the mid- to late 1990s became virtually worthless.
“You can’t fix this problem by sending people to reeducation camps. You must first erase the public’s mistrust in state financial institutions and recover trust,” the source in Chagang Province claimed.
“It’s government policy for people to borrow money from state banks once they’ve created their own bankbooks, but when those same banks don’t lend to people without collateral or people who quickly need just a bit of money, people survive by borrowing money at [high] interest from private lenders.”
Meanwhile, around 10 police officers in South Hamgyong Province and Chagang Province were dismissed from their positions after taking bribes from private moneylenders to warn them in advance of the impending crackdown.
Translated by David Black. Edited by Robert Lauler.
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